A People's Guide to the Federal Budget by Mattea Kramer et al /National Priorities Project

Author:Mattea Kramer et al /National Priorities Project
Language: eng
Format: epub
ISBN: 9781566568876
Publisher: Interlink Publishing Group Inc
Published: 2012-10-15T00:00:00+00:00

The Federal Debt

“A national debt, if it is not excessive, will be to us a national blessing.”

—Alexander Hamilton, First US Secretary of the Treasury

Earlier chapters discussed revenues and government spending, which together comprise the annual federal budget. If these are equal in a given fiscal year, the government has a balanced budget. If revenues are greater than spending, the result is a surplus. But if government spending is greater than tax collections, the result is a deficit. The federal government then must borrow money to fund its deficit spending.

The federal debt is the total amount of money that the federal government has borrowed over the years to finance its deficits, minus what it has since repaid. (The federal debt is also called the national debt.) Every year the government runs a deficit, the money it borrows adds to the federal debt. Therefore, the federal debt is the sum of all past deficits. Contrarily, if the government runs a surplus, that allows the government to pay down some of its debt. That’s just like when a person has some extra cash and uses the money to pay down credit card debt.

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